8 Apr 2020

Employees say worker subsidy not being paid in full

6:34 pm on 8 April 2020

Some employers are not passing on all of the wage subsidy they are receiving for workers and are instead pocketing the money for themselves.

Barista preparing a cappuccino

Barista preparing a cappuccino Photo: 123RF

As of yesterday 40 percent of the country's workforce was receiving a subsidy with $6.6 billion having been paid out so far.

The $585 a week subsidy requires employers to use their best endeavours to pay people up to 80 percent of their pre-lockdown wage.

But some say employees are telling them they need the money to pay the business' rent, or even their own mortgage.

A hospitality worker we will call Carol, said before the lockdown she was being paid about $450 before tax for the 30 hours she worked each week.

She said her boss was now claiming the full $585 a week on her behalf but only passing on $350 of this and pocketing $235.

"I think they should be paying us our full wages because even if they did do that, they would still be able to keep some of the subsidy. I talked to them about it and they said that because they applied for the wage subsidy before the modifications were made, they just have to do best efforts to pay us 80 percent, but it's not really best efforts when they have been given the full money to be able to pay us everything, and they're just choosing not to."

Carol said she knew of one part-timer working for the same company who was now only receiving $180 a week, when the full subsidy for those working 20 hours or fewer was $350.

She said the $100 a week cut to her income meant things were tight financially.

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"I mean when you take tax into it as well, I'm getting just under $300. So it's really I'm just getting enough to pay food and the rent at the moment and luckily I don't have to get petrol or anything because I'm not going anywhere. But if I had to, I wouldn't be able to at this point."

Chloe Ann-King runs an advocacy service for hospitality workers known as Raise the Bar, providing free employment law advice. She also works in a bar where her employer has taken out a loan so they could continue employing all of their staff on full pay.

But she was hearing about some flagrant abuses of the wage subsidy scheme.

"One employer who owns a homestead is only offering $70 of the wage subsidy to all her workers and was holding the rest of it. I've got employers saying that they're just not going to pay any of it because they need to keep their business afloat during these times. I've talked to hospitality workers who got fired at will, before or during a lockdown, but they absolutely know that their employer used their details to claim this subsidy."

Ann-King said while she understood the precarious state of most hospitality businesses at the moment, there was no excuse for robbing workers of their entitlements.

"It does seem that many employers think that the wage subsidy is some kind of slush fund for them, and that they can spend it however they see fit. I don't understand why they think that they can withhold all or part of the subsidy, use it to keep their businesses afloat during this time or, you know, plead poverty to their workers and say they've got kids to feed. Many workers have kids to feed as well and have themselves to feed."

Employment lawyer Barbara Buckett said employers keeping any outstanding money for themselves, after they had paid workers the subsidy, could find themselves in hot water.

"People are misunderstanding that that money is tagged to the employee for the benefit of holding that job open. And it's best endeavours to hold it open at 80 percent and employers are getting this wrong. That money left over still has to be identified and tagged to that employee. They can't use it for any other purpose."

Buckett was advising businesses to put any money left over from the subsidy in to a separate account.

"I don't know where it's going to go to, whether the Government afterwards are going to say well, okay, we'll do an audit and they may even ask for the money to be paid back if it's not utilised for that purpose."

Max Bremner owns five bars in Christchurch and is receiving the wage subsidy for all of his 100 staff.

He said as tough as times were now in his business, employers should resist the temptation to bend the rules.

"I haven't heard of anyone doing that, and they'll be stupid to do it. But then again, stressed businesses, you suddenly get a whole bunch of cash thrown at you, you know, you could imagine that people would be tempted not to pass it on."

Anybody worried their employer might be claiming the subsidy and not passing it on to them could now log on to the Ministry of Social Development website and enter their employer's name in to a register, to see if they were receiving it.

The same website also allows people to make a complaint about the scheme.

From when it went live on Monday until midday Wednesday, 170 complaints had been lodged, mostly to do with the subsidy having not been passed on to workers.

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